By the time this is being read, currently available oil production capacity all around the world will be producing flat out. How sustainable this proves to be remains to be seen.

For many years now non-Opec production has been operated at capacity, leaving Opec to fine tune production in order to achieve its price objectives. In economic terms, because no company or country had the capacity to challenge Opec, they had no choice but to be price takers, maximising earnings by maximising production.

Opec's record production of 31.7mn b/d in 1977 wasn't exceeded until November 2003, since then it has never been under that level. It reached 32.2mn b/d in March, dropped back a little in April and May, and then in June reached 32.65mn b/d.

The utilisation of the final bits of readily available capacity in Saudi Arabia - in line with the 0.5mn b/d expansion in Opec quotas from August - means that early August production will exceed 33mn b/d. After that, the only incremental capacity is the, definitionally unsustainable, surge capacity and any new capacity that comes onstream. On p38 of the August issue Petroleum Review has tabulated the most up-to-date version of its megaprojects database. Although one or two projects have been added since it was last published (Petroleum Review, January 2004 - unfortunately now out of print). Most of the changes are project delays, most notably the Nigerian offshore Bonga, Erha and Agbami projects.

On p42 is Petroleum Review's annual re-presentation of global oil production from the latest BP Statistical Review, June 2004. This shows that 18 major oil producers are now in decline, handsomely offset by rapidly expanding production from the 15 countries growing at over 5%/y and the eight growing at over 10%/y. A straw in the wind, however, is that decline is now running at over 1.1mn b/d and there is evidence of decline rates increasing.

The feature on p18 confirms the view that the industry is now making a massive commitment to new LNG projects. This potential investment boom is being driven by three factors - the desire to monetise stranded gas, the need to make up for US and Canadian gas production shortfalls, and the attractions of probably the fastest growing area of the whole oil and gas business - LNG. As part of this feature we have produced our first tabulation of all the gas megaprojects. What this clearly shows is that if all these LNG and GTL projects go ahead, by the end of the decade there will be few gas discoveries not in production or queued for production. Equally certain is that declining gas production in Canada and the US is providing a major, and potentially rapidly growing, market for LNG. Our annual reviews of recent developments in the US and Canada are on p14, 24 and 30.

On p26 Dr Salameh tackles the thorny question of how accurate are Middle East reserve estimates. His conclusion that these may be overstated by up to 300bn barrels, or roughly five North Seas, will certainly give pause for thought. If his assessments are right, the world faces very major challenges in developing and securing the oil supplies it will require.

However, the most minimal concern must be the latest developments in Russia. The nerve twisting drama of Yukos and the tax demands has now taken a dramatic and deeply disturbing twist. It now appears that the tax authorities wish to remove the bulk of Yukos' production assets and so, we are told, sell them for a fraction of their worth. If this proves true, the hopes that Russia could be safely invested in, with law and regulation being fairly applied, are undermined. Investors with liquid assets will leave, those left will not be sure if they have paid good money for assets or liabilities. If the situation is not regularised very quickly - by Presidential intervention if necessary - then the outlook is very bleak indeed.

In the preparation of our megaprojects tables every effort has been made to ensure they are as accurate as possible. Our time and resources are necessarily limited, so if any reader has better information we would be very pleased to hear from them. We extend our thanks to all who have helped in the past.

The Energy Institute is to hold a major conference on oil depletion on 10 November, in which all aspects of the topic will be discussed. For further details, contact the EI Events Department t: +44 (0)20 7467 7100 or www.energyinst.org.uk

Chris Skrebowski

The opinions expressed here are entirely those of Chris Skrebowski, Editor of Petroleum Review, and do not necessarily reflect the view of the EI.